Brown’s $122.6 billion budget favors education, social programs

Updated 9:15 pm, Thursday, January 7, 2016

Gov. Jerry Brown unveils his 2016-17 bud
get proposal that down
plays fund
ing for new programs, but keeps the state finan
cially stable.

Gov. Jerry Brown unveils his 2016-17 bud
get proposal that down
plays fund
ing for new programs, but keeps the state finan
cially stable.

Photo: Rich Pedroncelli, Associated Press

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Gov. Jerry Brown holds a chart showing how a recession could throw the state back into the red if spending grows.

Gov. Jerry Brown holds a chart showing how a recession could throw the state back into the red if spending grows.

Photo: Rich Pedroncelli, Associated Press

Brown’s $122.6 billion budget favors education, social programs

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SACRAMENTO — Gov. Jerry Brown on Thursday introduced a record $122.6 billion budget for 2016-17, calling for spending increases in education and a boost in the earned income tax credit for the poorest working families, and providing the first cost-of-living increase for the elderly, blind and disabled since 2006.

“The budget, relative to budgets of the past decade and a half, is in good shape,” the governor said at a Capitol news conference.

But he continued to warn against spending for new programs, saying that even a moderate recession, combined with more permanent spending, could plunge the state deep into the red.

Time after time, he brandished a huge chart showing that a recession could push the state budget into a $40 billion-plus deficit by the 2019-20 budget year.

“We’ve had 10 recessions since World War II and we know we’ll have another, but no one ever prepares for it, so it comes as a surprise,” Brown said. “If we do everything I want, there will still be red, but less red.”

Brown said that although there are many state programs that deserve additional funding, the state cannot afford to pay for everything, which means choices have to be made.

“Most of every program you will hear about in the next nine months will be good, and it will help people,” he said, adding that state leaders must also consider the taxpayers’ capacity — and willingness — to pay for things.

‘Not much’ for low-income housing

When asked, for example, what the budget does to address the low-income housing crisis facing the Bay Area and the rest of the state, Brown hemmed and hawed for a moment before replying, “Not much.”

Providing new housing for the homeless is an important goal, but an expensive one that has to be considered with the other needs of the state, the governor said. Brown said he would consider a plan pushed by Democratic leaders, who want a $2 billion bond to build housing for homeless people and $200 million from the general fund over the next four years to pay for programs.

The budget introduced Thursday is just a starting point for future discussions, the governor said, acknowledging that many changes are likely before the new spending plan takes effect July 1.

Boost for retirees, disabled

Among the governor’s priorities are spending $380 million on an income tax credit for low-wage working families and providing the first cost-of-living increases since 2006 to retirees and disabled people who receive Social Security income.

One of the governor’s most controversial proposals is likely to be his plan to add $2 billion to the state’s Rainy Day Fund, bringing the balance to 65 percent of its constitutional target, rather than the 48 percent if only the required increases were made.

“Fully filling the Rainy Day Fund by the time the next recession begins should be the primary fiscal goal of the state,” according to the budget summary prepared by the state Department of Finance, which typically reflects the governor’s conservative spending preferences.

But for groups representing low-income Californians, the governor should be as concerned about the current condition of those who have missed out on the state’s growing prosperity as he is worried about what might happen in the future.

While Brown’s call for a new managed care organization tax will provide much-needed money for Medi-Cal, low-income recipients of state health care benefits still haven’t recovered the services that were cut during the Great Recession, said Anthony Wright, executive director of Health Access, which represents California health care consumers.

“This continues the (Medi-Cal) cuts made in 2007,” he said. “Nine or 10 benefits were taken away then, including vision, psychological services, podiatry and full dental. The state’s present surplus was built off those cuts, and we believe it’s high time to make some appropriate restorations.”

The new budget also reflects the governor’s transportation plan, which calls for spending $36 billion over the next 10 years for highway maintenance, public transit expansion and other transportation improvements.

It also sets aside $500 million from the general fund for deferred maintenance at state facilities, including parks, universities, community colleges, prisons and state hospitals, and provides money to renovate a number of government buildings in Sacramento.

Asked whether that money could be better spent on California’s poor than on state buildings, Brown said that while “maintenance is not dramatic,” it’s necessary.

“There’s always a temptation to let the roof deteriorate while you take a vacation, send the kids to college and go out to dinner,” Brown added.

Both Democratic and Republican legislative leaders praised the governor’s budget, while making it clear they’ll be looking for changes between now and the end of June.

The proposed budget “espouses a clear-eyed focus in maintaining California’s fiscal stability, and I will continue being a partner in this endeavor,” said state Senate leader Kevin de León, D-Los Angeles.

GOP leader is ‘disappointed’

Brown’s plan “sets the tone to look for one-time spending the state needs,” said state Sen. Jean Fuller of Bakersfield, the GOP state Senate leader. “But I’m disappointed that it only makes the minimum payment on the state’s remaining debt.”

The governor’s proposal is the first draft of a plan for general fund spending and comes with plenty of holes and question marks.

“We don’t get everything done in time for this press conference,” Brown joked.

The general fund pays for public education, prisons, courts, Medi-Cal and other public health and social service programs, transportation and environmental protection and is funded primarily by personal income taxes, sales taxes and corporate taxes.

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